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   Volume 81 - Issue 30 Website:www.passherald.ca   email: news@passherald.ca   $1.00   
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John PundykMy last few articles on Teck and the future of our real estate market generated some interesting debate among some of my friends. As many of the people in the Valley are familiar with the ups and downs of the coal business, the question of whether it will last is a valid one.
For me personally the discussion is a type of a deja vous moment – I am sure I have been in this debate elsewhere many years ago.
I was working at Syncrude in the late seventies and early eighties, when the Trudeau Government created what became known as the National Energy Program (NEP), which was followed by decline of the oil price and collapse of investment into the oil sands.
Everything stopped mid-stream, projects that took millions of dollars to start, were simply shattered and Alberta’s economy went from boom to bust at a speed that was hard to comprehend. Looking at Trudeau, and trying to understand what happened, taught me a very valuable lesson - one should often be wary of people with good intentions. Many of my friends in the oil patch were hit pretty hard and became quite cautious about the future.
In 1984, I left Fort McMurray and went to Edmonton to study at the University of Alberta, but kept going back to Syncrude or Suncor during the summers. In the early nineties, a friend enticed me to move back to work for a contractor who had projects at both of the plants. That was the beginning of the boom and things took off rapidly.
And here is my deja vous, since many of the old timers took a good beating in the early eighties, not everyone was ready to believe this new boom would last. Judging by the cavalier reaction of the Alberta government to the infrastructure deficiencies in Fort McMurray, I think some in the government did not believe in the longevity of the boom as well.
But this time it was different, in the eighties China was not a factor in the collapse of the oil price. However, in the nineties China, as well as India, made all the difference in supporting the rising price of oil.
 
If every family in China buys a car, which they eventually will do judging by what happened in South Korea, the price of oil is not coming down, even if it fluctuates at times.
And this brings me to Teck, metallurgical coal, and our little neck of the woods. Here again China and India make all the difference as we look at the future.
What we know of China is it manufactures many of the things that are part of our lives, even things that are not made in China may have many components that are. It seems like the whole country is like one giant factory that produces everything for everybody, but this is really only part of the story.
The other part of the story is that China is a huge underdeveloped country with about 1.4 billion people. What we see on TV are mostly a few great cities and a few coastal development areas, but there is a huge country beyond these areas that is in critical need of infrastructure development. This has to be done in order to close the growing economic disparity among China’s many different regions.
So, while China’s economic rise and rapid industrialization may have been mainly export driven – their real advance and need for resources is only just beginning as the country’s economy is starting to be driven by the economic needs of its huge population.
They need railroads, bridges, cars, busses, trucks, buildings of all sizes, and everything else one can only imagine. Most of these things have one thing in common - steel. When one thinks about the needs of 1.4 billion people, many of whom want cars, it is hard to imagine that the demand for steel, and therefore met coal, is about to diminish.
This is why, in similar fashion to what happened in Fort McMurray, history and past experience tells us only part of the story. Things change, and the other part of the story is written by the future. If one was to pay attention to what the stock market has to say about Teck- the future looks good.
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